Crypto markets experienced a notable rally on January 12, 2026, as escalating political tensions between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell drove investors toward alternative assets. The total cryptocurrency market capitalization rose approximately 1.5% to $3.2 trillion, led by gains in Bitcoin and several altcoins.
Bitcoin led the charge, climbing 1.8% to $92,054. Among altcoins, Zcash (ZEC) surged 10% to $414, Solana (SOL) gained 5.2% to $142, and Bittensor (TAO) increased 3.2% to $290. The rally followed a sharp escalation in the public feud between Trump and Powell. Powell disclosed that the Justice Department had issued grand jury subpoenas related to his congressional testimony on Federal Reserve building renovations, which he described as political pressure tied to the Fed's refusal to cut interest rates more aggressively. Trump has repeatedly criticized Powell's rate policy and discussed replacing him when his term ends in 2026.
Despite the price gains, overall market sentiment remained cautious. The Crypto Fear & Greed Index slipped two points to 27, keeping the market in the "Fear" zone. Derivatives data from CoinGlass showed liquidations surged 136% to $165 million over the past day, while total open interest edged higher by 0.47% to $139 billion.
On-chain analyst Willy Woo offered a mixed outlook, stating that investor flows bottomed around December 24, 2025, and have improved steadily since, which could support Bitcoin through late January and February. However, he expressed longer-term caution for 2026, noting that liquidity growth has lagged behind price momentum since early 2025. Woo emphasized that Bitcoin needs to challenge the $98,000–$100,000 zone before any discussion of sustained upside is meaningful.
The dispute unsettled traditional markets, weakening the U.S. dollar, pushing down stock futures, and sending gold to fresh record highs. Analysts view the crypto gains as a reflection of rising uncertainty in traditional markets rather than a clear shift in long-term risk appetite, with volatility expected to remain elevated.
